The Energy Charter is an international treaty that has come under fire for allegedly hindering efforts to combat climate change because it covers investments in fossil fuels.
The Energy Charter is an international treaty that has come under fire for allegedly hindering efforts to combat climate change because it covers investments in fossil fuels. The European Commission proposed on Friday that the EU’s member states resign collectively from the Energy Charter.
Energy companies have the legal right to sue governments for actions that negatively impact their financial investments under the 1998 Energy Charter Treaty. In recent years, this law has been used to challenge regulations requiring the shutdown of fossil fuel plants.
It has about 50 signatories, including nations from the European Union.
According to EU Energy Commissioner Kadri Simson, “I proposed that the EU withdraw from the Energy Charter Treaty because it is no longer in line with the EU’s energy and climate goals in its current, unmodernized version.”
The EU executive, the Commission, claimed that the treaty had become “increasingly outdated” and that its protections for fossil fuels undermined the EU’s plans to switch to cleaner energy sources in order to reduce greenhouse gas emissions.
Following the announcement of plans to leave the EU by several members, including Denmark, France, Germany, Luxembourg, Poland, Spain, and the Netherlands, Brussels has come under pressure to take the initiative. The majority of these states cited concerns about climate change as their primary justification. In 2016, Italy departed.
The European Parliament‘s approval and a strengthened majority of EU member states are required for the Commission’s proposal to pass. The EU should withdraw from the treaty, the European Parliament has previously urged.
Several nations, including Cyprus, Hungary, and Slovakia, have stated that they would prefer to remain in an updated version of the agreement; however, changes to the treaty that were agreed upon last year and intended to address some climate concerns do not appear likely to be implemented as EU nations have not backed them.
Brussels considered a partial exit that would have allowed some countries to stay in the treaty but decided against it due to legal considerations, according to sources with knowledge of the discussions.
Withdrawing from the treaty would still subject the EU to a sunset clause that safeguards current investments, such as those made in fossil fuels, in EU nations by investors from non-EU signatories like Japan and Turkey for 20 years.